Final answer:
Liability insurance is the type that protects salon owners from financial losses due to employee negligence, covering potential damage or injuries caused to clients. This is distinct from Workman's compensation insurance, which covers employee injuries on the job.
Step-by-step explanation:
The type of insurance that protects a salon owner from financial loss due to an employee's negligence is Liability insurance. This insurance covers the business if an employee damages a client's property, causes injury, or any other negligent act that would make the company liable. It is an essential coverage for businesses where employees interact with clients and provide services that could potentially lead to negligence claims.
It's important to note that this is different from Workman's compensation insurance, which is another form of business insurance mandated by law, requiring employers to cover the medical costs and a portion of lost wages for employees who suffer an injury on the job. In the case of a salon, this would apply if a stylist was injured while working.